<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
APRIA HEALTHCARE GROUP INC.
(Name of Issuer)
Common Stock, par value $0.001 per share
(Title of class of securities)
037933108
(CUSIP number)
Ralph V. Whitworth
Relational Investors, LLC
4330 La Jolla Village Drive, Suite 220
San Diego, California 92122
(619) 597-9400
(Name, address and telephone number of person authorized
to receive notices and communications)
November 17, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-l(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
<PAGE> 2
SCHEDULE 13D
CUSIP No. 037933108
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RELATIONAL INVESTORS, LLC
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 6,847,100
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 6,847,100
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
6,847,100
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.21%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
OO
<PAGE> 3
SCHEDULE 13D
CUSIP No. 037933108
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RELATIONAL INVESTORS, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 3,919,460
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 3,919,460
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
3,919,460
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.57%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
<PAGE> 4
SCHEDULE 13D
CUSIP No. 037933108
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RELATIONAL COAST PARTNERS, L.P.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC/OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 180,861
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 180,861
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
180,861
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.35%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
<PAGE> 5
SCHEDULE 13D
CUSIP No. 037933108
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RELATIONAL FUND PARTNERS, L.P.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC/OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 373,605
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 373,605
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
373,605
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.72%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
<PAGE> 6
SCHEDULE 13D
CUSIP No. 037933108
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RELATIONAL PARTNERS, L.P.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC/OO
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 573,818
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH ------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 573,818
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
573,818
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.11%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
<PAGE> 7
SCHEDULE 13D
CUSIP No. 037933108
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RALPH V. WHITWORTH
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 6,847,100
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,847,100
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
6,847,100
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.21%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
<PAGE> 8
SCHEDULE 13D
CUSIP No. 037933108
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
DAVID H. BATCHELDER
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS See Item 3
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 75,000
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 6,847,100
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
75,000
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,847,100
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
6,922,100
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.36%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
<PAGE> 9
SCHEDULE 13D
CUSIP No. 037933108
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JOEL L. REED
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
NA
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY ------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 6,847,100
REPORTING ------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
6,847,100
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
6,847,100
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.21%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
<PAGE> 10
Pursuant to Rule 13d-2(a) of Regulation 13D-G of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, the
undersigned hereby amend their Schedule 13D statement dated October 9, 1997, as
amended by Amendment No. 1 dated January 28, 1998 and Amendment No. 2 dated
February 5, 1998 (the "Schedule 13D"), relating to the common stock, par value
$0.001 per share (the "Shares") of Apria Healthcare Group Inc. (the "Company").
Unless otherwise indicated, all defined terms used herein shall have the same
meanings ascribed to them in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The answer to Item 3 is hereby amended by the addition, following the
last paragraph thereof, of the following:
The source and amount of funds for Shares acquired since February 5,
1998, the date of Amendment No.2 to the Schedule 13D, are as follows:
An account managed by RILLC purchased an aggregate of 1,655,200 Shares
for total consideration (including brokerage commissions) of $7,746,042 derived
from capital in the managed account.
David Batchelder, individually, purchased an aggregate of 75,000 Shares
for a total consideration (including brokerage commissions) of $307,780 derived
from his individual retirement account.
Options to acquire 25,000 Shares were granted to Ralph Whitworth, as a
Director of the Company, under to the 1997 Stock Incentive Plan of the Company.
Such options will be exercisable commencing December 31, 1998.
Options to acquire 25,000 Shares were granted to David Batchelder, as a
Director of the Company, under to the 1997 Stock Incentive Plan of the Company.
Such options will be exercisable commencing December 31, 1998.
ITEM 4. PURPOSE OF THE TRANSACTION.
The answer to Item 4 is hereby amended and restated in its entirety, as
follows:
As previously reported, the Reporting Persons acquired the Shares of the
Company for investment purposes. In their opinion, such Shares continue to be
undervalued by the market at the present time.
At the invitation of the Board of Directors of the Company, on January
27, 1998, Ralph Whitworth, a Reporting Person, was appointed to the Company's
Board. He was subsequently elected Chairman of the Board of Directors of the
Company and continues to serve in such capacity. On July 28, 1998, David H.
Batchelder, a Reporting Person, was also appointed to the Board. The Reporting
Persons intend to continue their ongoing efforts, consistent with the fiduciary
duties of Messrs.
<PAGE> 11
Whitworth and Batchelder as members of the Company's Board of Directors, to
influence the Company to maximize the value of the Shares of the Company.
The Reporting Persons may discuss the Company from time-to-time with
other shareholders and interested parties concerning the Company, and may
exercise any and all of their respective rights as shareholders of the Company
in a manner consistent with their equity interests and fiduciary duties of
Messrs. Whitworth and Batchelder as members of the Company's Board of Directors.
The Reporting Persons may modify their plans, in light of future developments.
Subject to the fiduciary duties of Messrs. Whitworth and Batchelder as
members of the Company's Board of Directors, the Reporting Persons may from
time-to-time (i) acquire additional Shares (subject to availability at prices
deemed favorable) in the open market, in privately negotiated transactions or
otherwise, or (ii) dispose of Shares at prices deemed favorable in the open
market, in privately negotiated transactions or otherwise.
As previously reported, on February 3, 1998, RILLC entered into a
Stockholder Agreement (the "Stockholder Agreement") with JLL Argosy Apria, LLC
("Investor"), CIBC WG Argosy Merchant Fund 2, LLC ("Argosy"), Joseph Littlejohn
& Levy Fund III, L.P. ("JLL"), HBI Financial, Inc. ("HBI") and the Company.
Argosy and JLL are members of the Investor. The Stockholder Agreement contained
certain provisions that might have resulted in the acquisition by the Investor
from the Company of shares of Common Stock and warrants exercisable for shares
of Common Stock and a change in the Board of Directors of the Company. In April
1998, the transactions contemplated by the Stockholder Agreement were terminated
without any obligation to any party.
Except as set forth above and in Item 6 of this Schedule 13D, none of
the Reporting Persons has any present plans or intentions which would result in
or relate to any of the actions described in subparagraphs (a) through (j) of
Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The answers to Item 5(a), (b) and (c) are hereby amended and restated in
their entirety, as follows:
(a) As of the date of this Statement, the Reporting Persons beneficially
owned in the aggregate 6,922,100 Shares constituting 13.36% of the outstanding
Shares. The percentage of Shares owned is based upon 51,779,059 Shares
outstanding at October 30, 1998 as set forth in the Company's Form 10-Q for the
quarter ended September 30, 1998. In addition, in accordance with Rule 13d-3
under the Securities Exchange Act of 1934, as amended, 50,000 Shares which are
subject to stock options exercisable within 60 days of the date of this
Amendment and which are deemed to be beneficially owned by the Reporting Persons
(collectively), and each of RILLC and Messrs. Whitworth, Batchelder and Reed are
deemed to be outstanding for the purpose of computing the percentages of Shares
outstanding owned by the Reporting Persons (collectively), RILLC and Messrs.
Whitworth, Batchelder and Reed (but not RILP, RFP, RCP or RP).
<PAGE> 12
Each of the Reporting Persons may be deemed to have direct beneficial
ownership of Shares as follows:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT OF OUTSTANDING
SHARES
- ------ ---------------- ----------------------
<S> <C> <C>
David Batchelder 75,000 0.14%
RILLC 1,799,356 3.47%
RILP 3,919,460 7.57%
RFP 373,605 0.72%
RCP 180,861 0.35%
RP 573,818 1.11%
</TABLE>
RILLC, in its capacity as an investment management consultant, may be
deemed to possess direct beneficial ownership of the 1,749,356 Shares that are
owned by separate accounts which it manages and of the 50,000 Shares which are
subject to stock options exercisable within 60 days of the date of this
Amendment. In addition, RILLC, as the sole general partner of each of RILP, RFP,
RCP and RP may be deemed indirectly to own beneficially (as that term is defined
in Rule 13d-3 under the Securities Exchange Act of 1934) 5,047,744 Shares (or
9.74% of outstanding Shares) of which one of RILP, RFP, RCP or RP may be deemed
to possess direct beneficial ownership.
In addition to the Shares of which Mr. Batchelder is the direct
beneficial owner, as a Managing Member of RILLC, Mr. Batchelder, as well as
Messrs. Whitworth and Reed may be deemed to share beneficial ownership of the
6,847,100 Shares (or 13.21% of outstanding Shares) which RILLC may beneficially
own. Each of Messrs. Whitworth, Batchelder and Reed disclaims beneficial
ownership of such 6,847,100 Shares for all other purposes.
To the best of the knowledge of each of the Reporting Persons, other
than as set forth above, none of the persons named in Item 2 is the beneficial
owner of any Shares.
(b) Mr. Batchelder has the sole power to vote or direct the vote of
75,000 Shares and the sole power to dispose or direct the disposition of such
Shares.
RILP has the sole power to vote or direct the vote of 3,919,460 Shares
and the sole power to dispose or direct the disposition of such Shares.
RFP has the sole power to vote or direct the vote of 373,605 Shares and
the sole power to dispose or direct the disposition of such Shares.
RCP has the sole power to vote or direct the vote of 180,861 Shares and
the sole power to dispose or direct the disposition of such Shares.
RP has the sole power to vote or direct the vote of 573,818 Shares and
the sole power to dispose or direct the disposition of such Shares.
<PAGE> 13
RILLC has the sole power to vote or direct the vote of 1,749,356 Shares
held by separate accounts which it manages and of 50,000 Shares that are subject
to stock options exercisable within 60 days of the date of this Amendment, and
the sole power to dispose or direct the disposition of such Shares. In addition,
RILLC, as sole General Partner of RILP, RFP, RCP and RP, may be deemed to have
the sole power to vote or direct the vote of 5,047,744 Shares held by such
Reporting Persons, and the sole power to dispose or direct the disposition of
such Shares. Messrs. Batchelder, Whitworth and Reed, as the Managing Members of
RILLC, may be deemed to share the power to vote or to direct the vote and to
dispose or to direct the disposition of all such Shares.
(c) Information concerning transactions in the Shares by the Reporting
Persons during the past sixty (60) days is set forth in Exhibit 1A attached
hereto.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The answer to Item 6 is hereby amended by the deletion of the last seven
paragraphs of the Item concerning the Stockholder Agreement (which paragraphs
were added by Amendment 2 to the Schedule 13D) and the addition, in lieu
thereof, of the following:
In October 1998, the Company announced that it expects to make a
distribution of rights (the "Rights Offering") entitling stockholders to
subscribe, on a prorata basis, for an aggregate of approximately $50 million
principal amount of the Company's convertible subordinated debentures (the
"Debentures"). On November 3, 1998, RILLC, on behalf of RILP, RFP, RCP, RP, and
a separate account under the management of RILLC (the "RILLC Parties") and the
Company, entered into a Standby Purchase Agreement (the "Standby Agreement")
pursuant to which RILLC has agreed, subject to certain conditions, to purchase
any of the Debentures not purchased by others in the offering.
According to the Summary Term Sheet attached to the Standby Agreement as
Annex B, the Debentures will be convertible at the option of the holder at any
time after June 1, 1999 and prior to the maturity date in 2004, unless
previously redeemed or repurchased, into shares of Common Stock of the Company
at the conversion price equal to 10% above the average trading price of the
Common Stock of the Company for the ten trading days ending three days prior to
the effective date of the Registration Statement covering the Rights Offering
(the "Conversion Price"); provided, that if such average trading price (a) is
equal to or less than $3.6363, the Conversion Price shall be deemed to equal
$4.00 and (b) is equal to or greater than $4.5454, the Conversion Price shall be
deemed to equal $5.00.
The Debentures are subject to mandatory redemption on the fifth
anniversary of the initial date of issuance; redemption at the option of the
Company at any time on or after the third anniversary of issuance; and
redemption at the option of the holder upon the occurrence of a Change of
Control.
The Company also granted RILLC and the RILLC Parties certain demand and
piggyback registration rights pursuant to a Registration Rights Agreement, dated
November 3, 1998.
See the Standby Agreement attached hereto as Exhibit 5, and the
Registration Rights Agreement attached hereto as Exhibit 6, which are
incorporated in their entirety into this Item 6.
<PAGE> 14
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
1 Information concerning transactions in the Shares effected by
the Reporting Persons (as of October 9, 1997).*
1A Information concerning transactions in the Shares effected by
the Reporting Persons within the last sixty days (as of November
20, 1998).
2. Customer Agreement with Donaldson, Lufkin & Jenrette Securities
Corporation.*
3. Joint Filing Agreement.*
4. Stockholder Agreement, dated February 3, 1998, among JLL Argosy
Apria, LLC, CIBC WG Argosy Merchant Fund 2, LLC, Joseph
Littlejohn & Levy Fund III, L.P., Relational Investors, LLC, HBI
Financial, Inc. and Apria Healthcare Group, Inc** .
5. Standby Purchase Agreement dated as of November 3, 1998, between
Apria Healthcare Group Inc. and Relational Investors, LLC, on
behalf of the entities named therein.
6. Registration Rights Agreement dated as of November 3, 1998,
between Apria Healthcare Group Inc. and Relational Investors,
LLC, on behalf of the entities named therein.
* Filed with the initial Schedule 13D of the Reporting Persons, dated
October 9, 1997.
** Filed with Amendment No. 2 to the Schedule 13D of the Reporting
Persons, dated February 5, 1998.
<PAGE> 15
SIGNATURES
After reasonable inquiry and to the best of their knowledge and belief,
the undersigned certify that the information contained in this statement is
true, complete and correct.
Dated: November 20, 1998
RELATIONAL INVESTORS, L.P.
RELATIONAL FUND PARTNERS, L.P.
RELATIONAL COAST PARTNERS, L.P.
RELATIONAL PARTNERS, L.P.
By: Relational Investors, LLC
as general partner to each
By: /s/ David Batchelder
--------------------
David Batchelder
Managing Member
RELATIONAL INVESTORS, LLC
By: /s/ David Batchelder
--------------------
David Batchelder
Managing Member
/s/ Ralph V. Whitworth
- ----------------------
Ralph V. Whitworth
/s/ David H. Batchelder
- -----------------------
David H. Batchelder
/s/ Joel L. Reed
- ----------------
Joel L. Reed
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
---------- ------------
<S> <C>
1. Information concerning transactions in the Shares effected by
the Reporting Persons (as of October 9, 1997).*
1A Information concerning transactions in the Shares effected by
the Reporting Persons within the last sixty days (as of November
20, 1998).
2. Customer Agreement with Donaldson, Lufkin & Jenrette Securities
Corporation.*
3. Joint Filing Agreement.*
4. Stockholder Agreement, dated February 3, 1998, among JLL Argosy
Apria, LLC, CIBC WG Argosy Merchant Fund 2, LLC, Joseph
Littlejohn & Levy Fund III, L.P., Relational Investors, LLC, HBI
Financial, Inc. and Apria Healthcare Group, Inc** .
5. Standby Purchase Agreement dated as of November 3, 1998 between
Apria Healthcare Group Inc. and Relational Investors, LLC, on
behalf of the entities named therein.
6. Registration Rights Agreement dated as of November 3, 1998
between Apria Healthcare Group Inc. and Relational Investors,
LLC, on behalf of the entities named therein.
</TABLE>
* Filed with the initial Schedule 13D of the Reporting Persons, dated
October 9, 1997.
** Filed with Amendment No. 2 to the Schedule 13D of the Reporting
Persons, dated February 5, 1998.
<PAGE> 1
Exhibit 1A
TRANSACTIONS IN SHARES OF THE COMPANY
DURING THE PAST SIXTY (60) DAYS
The Reporting Persons engaged in the following transactions in Shares of
the Company during the past sixty (60) days. All transactions involved purchases
of Shares on the New York Stock Exchange, unless marked (OTC) in the second
column to indicate a purchase on the Over-the-Counter Market.
<TABLE>
<CAPTION>
Reporting Person with Denotes Over-the- Price per Share
Direct Beneficial Counter Market Date of Number (including
Ownership (OTC) Trade Transaction of Shares Commissions)
- ------------------------------ --------------------- --------------- ------------ -----------------
<S> <C> <C> <C> <C>
Relational Investors, LLC 10/26/98 27,100 $ 3.80
Relational Investors, LLC NA 11/1/98 50,000 NA
David Batchelder 11/11/98 25,000 $ 4.25
David Batchelder 11/12/98 50,000 $ 4.04
Relational Investors, LLC (OTC) 11/16/98 100,000 $ 4.10
Relational Investors, LLC 11/16/98 47,000 $ 4.10
Relational Investors, LLC (OTC) 11/17/98 250,000 $ 4.30
Relational Investors, LLC 11/17/98 2,600 $ 4.30
Relational Investors, LLC (OTC) 11/18/98 800,000 $ 4.47
Relational Investors, LLC 11/18/98 1,500 $ 4.47
Relational Investors, LLC (OTC) 11/19/98 400,000 $ 5.56
Relational Investors, LLC 11/19/98 27,000 $ 5.56
</TABLE>
<PAGE> 1
STANDBY PURCHASE AGREEMENT
dated as of November 3, 1998
between
APRIA HEALTHCARE GROUP INC.
and
RELATIONAL INVESTORS, LLC,
ON BEHALF OF THE ENTITIES NAMED HEREIN
$50,000,000
10% Convertible Subordinated Debentures due 2004
<PAGE> 2
STANDBY PURCHASE AGREEMENT
This Standby Purchase Agreement, dated as of November 3, 1998 ("the
Agreement"), is entered into by and between Relational Investors, LLC, a
Delaware limited liability company (together with its affiliates, "Relational"),
on behalf of each of the entities set forth on Annex A hereto (collectively with
Relational, the "Investors") and Apria Healthcare Group Inc., Delaware
corporation (the "Company").
WHEREAS, the Company purposes to distribute to its stockholders rights
("Rights") to purchase approximately $50,000,000 aggregate principal amount of
its 10% Convertible Subordinated Debentures due 2004, with the exact aggregate
principal amount being equal to the number of shares of common stock outstanding
on the record date for distribution of the Rights (the "Debentures"). The
Debentures will be issued pursuant to an indenture to be entered into between
the Company and the trustee thereunder (the "Trustee"). The offering of the
Debentures pursuant to the Rights is referred to herein as the "Rights
Offering;"
WHEREAS, each Right will include a Basic Subscription Privilege, pursuant
to which each holder of 1,000 Rights will have the right to purchase $1,000
principal amount of Debentures at the subscription price of $1,000 per Debenture
(the "Subscription Price") and an Oversubscription Privilege by which persons
who exercise their Basic Subscription Privilege in full may subscribe to
purchase Debentures not purchased by other holders of Rights, subject to
proration; provided that Debentures will only be issued in minimum denominations
of $1,000 in principal amount and integral multiples thereof;
WHEREAS, the Company will file with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 covering the
registration of the Debentures and the shares of Common Stock, par value $0.001
per share (the "Common Stock"), of the Company issuable upon conversion of the
Debentures under the Securities Act of 1933, as amended (the "1933 Act"),
including the related preliminary prospectus or prospectuses. Promptly after the
Registration Statement is declared effective by the Commission, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that is
omitted from such registration statement at the time it becomes effective but
that will be deemed to be part of such registration statement pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each
prospectus used before such registration statement becomes effective is herein
called a "preliminary prospectus." Such registration statement, including the
<PAGE> 3
exhibits and schedules thereto, if any, and the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time it becomes effective, and including the Rule 430A Information, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall be deemed to include the Rule 462(b) Registration Statement.
The final prospectus, including the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, in the form that it was
first furnished to stockholders of the Company in connection with the Rights
Offering is herein called the "Prospectus." For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR"). All references in this
Agreement to financial statements and schedules and other information which is
"contained," "included" or "stated" in the Registration Statement, any
preliminary prospectus or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act")
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be;
WHEREAS, in order to help assure the success of the Rights Offering, the
Investors are willing to commit to exercise all of their Basic Subscription
Privileges and their Oversubscription Privileges to subscribe for an aggregate
principal amount of $50,000,000 of Debentures, subject to the terms and
conditions set forth herein; and
<PAGE> 4
NOW THEREFORE, in consideration of the mutual agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Investors do hereby agree as
follows:
SECTION 1.
The Rights Offering; Standby Purchase Commitment.
(1) Subject to the terms and conditions set forth herein, on or before 5:00
p.m. on the expiration date of the Rights (the "Expiration Date"), each of the
Investors will take all such action as may be required to duly and effectively
exercise all of the Basic Subscription Privileges to which it may be entitled,
and to exercise such Investor's proportionate share of the Oversubscription
Privileges such that the aggregate amount of Debentures for which the
Oversubscription Privileges are exercised by the Investors is equal to
$50,000,000 principal amount of the Debentures less the Investors' aggregate
Basic Subscription Privileges.
The obligation of each Investor to purchase the Debentures pursuant to the
Rights Offering is subject to the Debentures containing such terms as are set
forth in the summary of Terms attached as Annex B hereto and the purchase price,
interest rate and conversion price not being any less favorable to the Investors
then those set forth in such summary of Terms.
(2) The Company hereby agrees to pay the Investors a fee equal to $1
million (the "Standby Commitment Fee") as compensation for agreeing to exercise
their Basic Subscription Privileges and their Oversubscription Privileges as
specified in Section 1(a). The Standby Commitment Fee shall be payable at the
Closing.
SECTION 2.
Representations and Warranties.
(a) The Company represents and warrants to each Investor and agrees with
each Investor, as follows:
(1) The Company meets the requirements for use of Form S-3 under the
1933 Act. The Registration Statement and rule 462(b) Registration Statement will
be prepared by the Company in conformity with the requirements of the 1933 Act
and the 1933 Act Regulations and will be filed with the Commission under the
1933 Act. Prior to the commencement of the Rights Offering, each of the
Registration Statement and any Rule 462(b) Registration Statement will become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement or the
qualification of the Indenture will have been issued and no proceedings for that
purpose will have been instituted or be pending or, to the knowledge of the
Company, contemplated by the Commission, and any request on the part of the
Commission for additional information will have been complied with. A copy of
each of the Registration Statement and the Rule 462(b) Registration Statement
will be delivered by the Company to each Investor. At the respective times the
Registration Statement or any Rule 462(b) Registration Statement become
effective, the Registration Statement and the Rule 462(b) Registration Statement
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and at the time any
post-effective amendments to the Registration Statement or any Rule 462(b)
Registration Statement become effective, any such post-effective amendments will
comply in all material respects with the requirements of the 1933 Act and the
<PAGE> 5
1933 Act Regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or any such
amendment or supplement is issued, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Prospectus, as
amended or supplemented, at the Expiration Date will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Indenture will be qualified under and comply in all material respects with the
Trust Indenture Act of 1939, as amended (the "1939 Act") and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act Regulations").
The representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the Company in
writing by either of the Investors expressly for use in the Registration
Statement or Prospectus or to that part of the Registration Statement which
shall constitute the Statement of Eligibility and Qualification under the 1939
Act (Form T-1) of the Trustee. Each preliminary prospectus and the prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or when filed pursuant to Rule 424 under the 1933 Act,
will comply when so filed in all material respects with the 1933 Act Regulations
and each preliminary prospectus and the final Prospectus will be identical to
the electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(2) The accountants who certify the financial statements and
supporting schedules included in the Registration Statement will be independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.
(3) The financial statements and the supporting schedules included in
the Registration Statement and the Prospectus will present fairly the financial
position of the Company and its consolidated subsidiaries as at the dates
indicated and the results of their operations for the periods specified; said
financial statements will have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as may
otherwise be indicated therein) ("GAAP"); and the supporting schedules included
in the Registration Statement will present fairly the information required to be
stated therein.
(4) Since September 30, 1998, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Company or its subsidiaries,
other than those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one enterprise, and
(C) there has been no dividend or distribution of any kind (other than the
distribution of the Rights ) declared, paid or made by the Company on any class
of its capital stock.
<PAGE> 6
(5) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement; and the Company
is duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect").
(6) Each subsidiary of the Company (as such term is defined in Rule
405 of the 1933 Act Regulations) (each a "Subsidiary" and collectively, the
"Subsidiaries"), has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify would not have a Material Adverse Effect; except as otherwise disclosed
in the Registration Statement, all of the issued and outstanding capital stock
of each such Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(7) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Company's quarterly report on Form 10Q for the
period ended June 30, 1998, filed with the Commission (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Registration Statement
or pursuant to the exercise of convertible securities, options or warrants
referred to in the Registration Statement). The shares of issued and outstanding
Common Stock have been duly authorized and validly issued and are fully paid and
non-assessable; the Common Stock conforms to all statements relating thereto
contained in the Registration Statement; and the issuance of the Debentures and
the shares of Common Stock issuable upon conversion of the Debentures will not
be subject to preemptive or other similar rights.
<PAGE> 7
(8) The Debentures to be issued and sold pursuant to the Rights will
have been duly authorized, and when issued, authenticated and delivered pursuant
to the Rights, against payment of the consideration set forth therein, will have
been duly executed, authenticated, issued and delivered and will constitute
legal, valid and binding obligations of the Company, subject, as to enforcement,
to bankruptcy, insolvency, reorganization or other similar laws of general
applicability now or hereafter in effect relating to or affecting creditors'
rights and to general equity principles, and will be entitled to the benefits
provided by the Indenture, which will be substantially in the form included as
an exhibit to the Registration Statement; the Indenture will have been duly
authorized and duly qualified under the 1939 Act, and when executed and
delivered by the Company and the Trustee (assuming due authorization, execution
and delivery by the Trustee), will constitute a legal, valid and binding
instrument enforceable in accordance with its terms subject, as to enforcement,
to bankruptcy, insolvency, reorganization or other similar laws of general
applicability now or hereafter in effect relating to or affecting creditors'
rights and to general equity principles; and the Debentures and the Indenture
will conform in all material respects to the descriptions thereof in the
Registration Statement and the Prospectus.
(ix) Upon issuance and delivery of the Debentures in accordance with
this Agreement and the Indenture, the Debentures shall be convertible at the
option of the holder thereof for shares of Common Stock in accordance with the
terms of the Debentures and the Indenture; the shares of Common Stock initially
issuable upon conversion of the Debentures will have been duly authorized and
reserved for issuance, and when issued and delivered, pursuant to the terms of
the Indenture, will be validly issued, fully paid and non-assessable; such
shares are sufficient in number to meet the conversion requirements of the
Debentures; and
(x) Neither the Company nor any of its Subsidiaries is in violation of
its charter or by-laws or, except where such default would not have a Material
Adverse Effect, in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound, or to
which any of the material property or assets of the Company or any subsidiary is
subject; and the execution, delivery and performance of this Agreement, the
Indenture, the Debentures and the consummation of the transactions contemplated
herein and therein and compliance by the Company with its obligations hereunder
and thereunder have been duly authorized by all necessary corporate action and
will not conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any material
property or assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which it or any
of them may be bound, or to which any of the material property or assets of the
Company or any subsidiary is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
applicable law, rule, regulation, judgment, order or administrative or court
decree.
<PAGE> 8
(xi) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein); all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or of
which any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not material to
the Company and its subsidiaries considered as one enterprise; and there are no
contracts or documents of the Company or any of its subsidiaries which are
required to be filed as exhibits to the Registration Statement by the 1933 Act
or by the 1933 Act Regulations which have not been so filed.
(xii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the offering,
issuance or sale of the Debentures hereunder or the issuance of shares of Common
Stock upon conversion thereof, except such as may be required under the 1933 Act
or the 1933 Act Regulations, the 1939 Act or the 1939 Act Regulations or state
securities laws and the qualification of the Indenture under the 1939 Act.
(xiii) This Agreement has been duly authorized, executed and delivered
by the Company. This Agreement constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' right generally. The Board of Directors of the
Company, by action of the Special Finance Committee, has authorized and approved
this Agreement and the transactions relating thereto.
(xiv) The Company and its subsidiaries have good title to all real and
personal properties owned by them, in each case free and clear of all liens,
encumbrances and debts except (A) for property pledged and/or mortgaged pursuant
to the Credit Agreement among the Company, Bank of America, NationsBank and the
other lenders thereunder, as amended (the "Credit Agreement"), (B) as do not
materially interfere with the use made and proposed to be made of such
properties, (C) as set forth in the Registration Statement or (D) as could not
reasonably be expected to have a Material Adverse Effect.
(xv) Except as set forth in the Registration Statement or this
Agreement, there are no persons with registration or other similar rights to
have any securities (debt or equity) of the Company registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act.
(xvi) The documents to be incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or are filed with the
Commission, complied and will comply as to form in all material respects with
the requirements of the 1934 Act and the rules and regulations of the Commission
under the 1934 Act (the "1934 Act Regulations"), and, when read together with
the other information in the Prospectus, at the time the Registration Statement
and any amendments thereto becomes effective and at the Closing, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
<PAGE> 9
(xvii) Except as disclosed in the Registration Statement, and except
as to matters which, individually or in the aggregate, would not have a Material
Adverse Effect, neither the Company nor any of its subsidiaries has any material
liabilities or obligations (absolute, accrued, contingent or otherwise, known or
unknown), other than liabilities incurred in the ordinary course of business
subsequent to December 31, 1997.
(xviii) Except for such matters as would not, individually or in the
aggregate, have a Material Adverse Effect; (i) the Company and its subsidiaries
hold all permits, licenses, variances, exemptions, orders and approval (the
"Permits") of all governmental entities necessary for the operation of the
businesses of the Company and its subsidiaries, (ii) the Company and its
Subsidiaries are in compliance with the terms of the Permits and (iii) except as
disclosed in the Registration Statement, the businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance, or
regulation of any governmental entity.
(xix) Each of the Company and its Subsidiaries has filed all tax
returns required to be filed by any of them and has paid (or the Company has
paid on its behalf) or has set up an adequate reserve for the payment of, all
taxes required to be paid in respect of the periods covered by such returns. The
information contained in such tax returns is true, complete and accurate in all
material respects. Neither the Company nor any of its Subsidiaries is delinquent
in the payment of any tax, assessment or governmental charge except to the
extent of reserves established therefor. No deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its subsidiaries
that have not been finally settled or paid in full except to the extent of
reserves established therefor. No requests for waivers of the time to assess any
such tax are pending and there are no outstanding audit examinations, deficiency
litigations or refund litigations with respect to the Company or any of its
subsidiaries. The federal income tax returns of the Company and each of its
Subsidiaries consolidated in such returns have been examined by and settled with
the Internal Revenue Service for all years through December 31, 1995.
(xx) The Company and its Subsidiaries have not knowingly engaged in
activities which are prohibited under federal Medicare and Medicaid statutes,
including without limitation 42 U.S.C. 1320a-7b, or related state or local
statutes or regulations or which otherwise constitutes fraud.
(xxi) Except as set forth in the Registration Statement, and except
for such matters as will not, individually or in the aggregate, have a Material
Adverse Effect, the Company and each of its Subsidiaries (i) have obtained all
applicable permits, licenses and other authorizations which are required to be
obtained under all applicable Environmental Laws, (ii) are in compliance with
all terms and conditions of such required permits, licenses and authorizations
and also are in compliance with all other applicable requirements of
Environmental Laws and (iii) and are not aware of nor have received notice of
any past activity, practice, incident or action which will give rise to any
common law or statutory liability or otherwise form the basis of any claim,
action, suit or proceeding, against the Company or any of its Subsidiaries based
on or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling or the emission, discharge or release
into the environment, or any pollutant, contaminant or hazardous or toxic
material or waste.
<PAGE> 10
(xxii) The Company and each of its Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.
(b) Any certificate identified as a certificate under this Agreement and
signed by any officer of the Company and delivered to the Investors or to
counsel for the Investors shall be deemed a representation and warranty by the
Company to each Investor as to the matters covered thereby.
(c) Each Investor severally represents and warrants to the Company as of
the date hereof, and agrees with the Company, as follows:
(i) This Agreement has been duly authorized, executed and delivered by
such Investor.
(ii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and compliance by such
Investor with its obligations hereunder have been duly authorized by all
necessary action and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any material property or assets of such Investor or any of its
subsidiaries pursuant to, any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which such Investor is a party or
by which it may be bound, or to which any of the material property or assets of
such Investor is subject, nor will such action result in any violation of the
provisions of the charter or by-laws, or comparable governing documents of such
Investor or any applicable law, rule, regulation, judgment, order or
administrative or court decree.
(iii) Such Investor has, or has available to it, sufficient funds for
the performance of its obligations pursuant to this Agreement.
<PAGE> 11
SECTION 3.
Closing.
--------
(a) On or prior to 10:00 a.m. on the Expiration Date, a closing (the
"Closing") shall be had at the executive offices of the Company at 3560 Hyland
Avenue, Costa Mesa, California or at such other place as the parties may agree.
At the Closing, (i) the Company shall deliver, or cause to be delivered, to the
Investors (A) each of the documents and agreements necessary to evidence
satisfaction of the conditions to the Investors' obligations as set forth herein
and (B) the Standby Commitment Fee, by wire transfer of funds to the accounts
specified by the Investors; and (ii) each Investor shall (A) deliver to the
Company all documents necessary for the exercise of its Basic Subscription
Privileges and Oversubscription Privileges in accordance with Section 1 hereto
and (B) make payment in full of the exercise price for its Basic Subscription
Privileges, by wire transfer of funds to the subscription agent for the Rights
Offering.
(b) As promptly as practicable, but in no event later than five business
days following the Expiration Date, the Company shall notify each Investor of
the principal amount of Debentures required to be purchased by it pursuant to
its Oversubscription Privileges. Not later than three business days following
receipt of such notice, each Investor shall make payment in full of the full
purchase price for the foregoing Debentures by wire transfer of funds to the
subscription agent for the Rights Offering.
(c) Delivery of the Debentures to the Investors shall by made by the
subscription agent for the Rights Offering in accordance with the terms and
provisions of the Rights Offering.
SECTION 4.
Covenants of the Company.
-------------------------
The Company covenants with each Investor as follows:
(a) The Company shall make all necessary filings with respect to the
transactions contemplated by this Agreement, under the 1933 Act and the 1934 Act
and the rules and regulations thereunder, under applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto. The Company will comply with the
requirements of Rule 430A and will notify the Investors immediately, and confirm
the notice in writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectus or any
amended Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission on the Registration Statement, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
and (v) of the suspension of the qualification of the Debentures or the shares
of Common Stock issuable upon the conversion of the Debentures, for offering or
sale in any jurisdiction, or the initiation or threatening of any proceedings
for any such purpose. The Company will promptly effect the filings necessary
pursuant to Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
<PAGE> 12
(b) The Company will prepare and file the Registration Statement or any
amendments thereto (including any filing under Rule 462(b)) or any amendment or
supplement to either the prospectus included in the Registration Statement at
the time it becomes effective or to the Prospectus, whether pursuant to the 1933
Act, the 1934 Act or otherwise, will furnish the Investors with copies of the
Registration Statement and any such amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such amendment or supplement or use any such prospectus to which any
Investor or counsel for the Investors shall reasonably object, provided that
such objection shall not prevent the filing of any such amendment or supplement
which, in the opinion of counsel for the Company, is required to be filed by the
requirements of the 1933 Act or the 1933 Act Regulations.
(c) If any event shall occur as a result of which it is necessary, in the
opinion of counsel for the Investors, to amend or supplement the Prospectus in
order to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if for any other reason
it shall be necessary to amend or supplement the Prospectus in order to comply
with the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, the Company will forthwith amend or supplement the Prospectus (in
form and substance satisfactory to counsel for the Investors and in compliance
with the 1933 Act and the 1933 Act Regulations) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statement therein,
in the light of the circumstances existing at the time it is delivered to a
purchaser, not misleading and will comply with the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, and the Company will
furnish to the Investors a reasonable number of copies of such amendment or
supplement.
(d) The Company will use the net proceeds received by it from the sale of
the Debentures for the repayment of indebtedness under the Credit Agreement.
<PAGE> 13
(e) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
1933 Act Regulations, then immediately following the execution of this
Agreement, the Company will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or, if required by such Rule 430A,
a post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.
(f) The Company will reserve and keep available at all times, free of
preemptive rights, shares of Common Stock for the purpose of enabling the
Company to satisfy any obligations to issue Common Stock upon conversion of the
Debentures.
(g) The Company and its Subsidiaries shall afford to the Investors and
their accountants, counsel and other representatives reasonable access during
normal business hours (and at such other times as the parties may mutually
agree) throughout the period prior to the Closing to all of its properties,
books, contracts, commitments, records and personnel and, during such period,
the Company shall furnish promptly to the Investors (i) a copy of each report,
schedule and other document filed or received by it pursuant to the requirements
of federal or state securities laws and (ii) all other information concerning
its business, properties and personnel as such Investor may reasonably request.
(h) The Company shall enter into an amendment to its Credit Agreement with
the other parties thereto on substantially the terms set forth on Annex C. The
Company also shall seek to amend the Credit Agreement as it deems necessary or
appropriate so that none of the transactions contemplated hereby, including,
without limitation, the conversion of the Debentures into Common Stock by any
Investor, will constitute or result in a Default ( as defined in the Credit
Agreement) or an Event of Default ( as defined in the Credit Agreement) under
the Credit Agreement as so amended and otherwise as the Company or the Investors
may deem appropriate.
(i) The Company shall take all action (including, if required, redeeming
all of the outstanding rights or amending or terminating the Rights Agreement,
dated as of June 30, 1997 (the "Rights Agreement"), by and among the Company,
Norwest Bank Minnesota, N.A. (the "Rights Agent") and U.S. Stock Transfer
Corporation, as amended, so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
grant of any rights to any person under the Rights Agreement to purchase or
receive additional shares of capital stock of the Company or enable or require
the rights to be exercised, distributed or triggered in any way. The Company
shall take such required action to provide that no right to exercise with
respect to any awards granted under the Abbey Amended and Restated 1992 Stock
Incentive Plan shall or may be accelerated as a result of the transactions
contemplated by this Agreement.
<PAGE> 14
(j) The Company will reimburse the Investors for all out-of-pocket expenses
reasonably incurred by them in connection with this Agreement and the
consummation of the transactions contemplated hereby, whether or not the
transactions contemplated in this Agreement are consummated, including without
limitation reasonable fees and disbursements of counsel.
SECTION 5.
Conditions of Investors' Obligations.
The obligations of the Investors hereunder are subject to the satisfaction
or waiver, on or prior to the date of the Closing (the "Closing Date"), of the
following conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at the Closing Date no stop order suspending
the effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission. A
prospectus containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) of the 1933 Act Regulations within the
prescribed time period and prior to the Closing Date the Company shall have
provided evidence satisfactory to the Investors of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A of
the 1933 Act Regulations.
(b) The representations and warranties made by the Company shall be true
and correct in all material respects and the Company shall have performed in all
material respects all obligations required to be performed by it prior to the
Closing.
(c) On the Closing Date the Investors shall have received:
(i) The favorable opinion, dated as of the Closing Date, of Robert S.
Holcombe, Esq., substantially in the form of Annex D hereto.
(ii) Payment by wire transfer of the Standby Commitment Fee to the
accounts specified by the Investors.
(iii) A letter from Gibson, Dunn & Crutcher stating that nothing has
come to their attention that would lead them to believe that the Registration
Statement or any amendment thereto, including the Rule 430A Information (except
for the financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom and the Form T-1, as to
which counsel need make no statement), at the time such Registration Statement
or any such amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for the financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which counsel need make no
statement), at the time the Prospectus was issued, at the time any such amended
or supplemented prospectus was issued or at the Closing Date, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iv) A certificate of the Chairman, the President or a Vice President
of the Company and of the chief financial or chief accounting officer of the
Company, dated as of the Closing Date, to the effect that (i) there has been no
Material Adverse Effect since the execution of this Agreement, (ii) the
representations and warranties in Section 2 hereof are true and correct in all
material respects with the same force and effect as though expressly made at and
as of Closing Date, (iii) the Company has complied in all material respects with
all agreements and satisfied all conditions required on its part to be performed
or satisfied at or prior to Closing Date pursuant to this Agreement.
<PAGE> 15
(v) From Deloitte & Touche, a letter dated such date, in form and
substance satisfactory to the Investors, to the effect that (i) they are
independent certified public accountants with respect to the Company and its
subsidiaries within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) it is their opinion that the consolidated financial statements and
supporting schedules included in the Registration Statement and covered by their
opinions therein comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations; (iii)
based upon limited procedures set forth in detail in such letter, nothing has
come to their attention which causes them to believe that (A) the interim
unaudited financial statements of the Company and its subsidiaries included in
the Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or are not presented in conformity with GAAP applied on a basis
substantially consistent with that of the audited consolidated financial
statements included in the Registration Statement (except as may otherwise be
indicated therein), (B) the unaudited amounts of revenue, earnings and earnings
per common and equivalent share set forth under "Selected Consolidated Financial
Data" in the Prospectus were not determined on a basis substantially consistent
with that of the audited consolidated financial statements included in the
Registration Statement, or (C) at a specified date not more than three days
prior to the Closing Date, there has been any change in the capital stock of the
Company or any increase in the consolidated long-term debt of the Company and
its subsidiary or any decrease in consolidated net current assets or net assets
as compared with the amounts shown in the balance sheet incorporated by
reference in the Registration Statement or, during the period from October 1,
1998 to a specified date not more than three days prior to the Closing Date,
there were any decreases, as compared with the corresponding period in the
preceding year, in consolidated revenues, net income or net income per share of
the Company and its subsidiaries, except in all instances for changes, increases
or decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur and except as otherwise set forth in such letter; and (iv)
in addition to the examination referred to in their opinions and the limited
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in the
Registration Statement and Prospectus and which are specified by the Investors,
and have found such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of the
Company and its Subsidiaries identified in such letter.
(d) At the Closing Date:
(i) No preliminary or permanent injunction or other order by any court
or other judicial or administrative body of competent jurisdiction which
prohibits or prevents the consummation of the transactions contemplated by this
Agreement shall have been issued and remain in effect.
(ii) An amendment to the Credit Agreement shall have been executed and
delivered by all parties thereto and the Investors and the Company shall be
reasonably satisfied that none of the transactions contemplated hereby,
including, without limitation, the conversion of the Debentures into Common
Stock by any Investor, will constitute a Default or an Event of Default under
the Credit Agreement as so amended.
(iii) The Company shall have obtained all consents and approvals from
and shall have made all filings and registrations with, any person, including
but not limited to any governmental entity, necessary to be obtained or made in
order to consummate the transactions contemplated by this Agreement.
<PAGE> 16
(iv) The Company shall have issued certificates evidencing the
Debentures and executed and delivered to each Investor a receipt of payment for
the amount subscribed for by such Investor.
(v) The Company shall have executed and delivered or caused to be
delivered the Registration Rights Agreement substantially in the form of Annex E
hereto.
(e) At the Closing Date, the Debentures and the Common Stock issuable upon
conversion thereof shall have been approved for listing on the New York Stock
Exchange, subject only to official notice of insurance.
SECTION 6.
Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless each Investor and
each person, if any, who controls any Investor within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage or expense
whatsoever, promptly after submission for payment, arising out of or resulting
from the transactions contemplated hereunder, including, but not limited to, (A)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statement
therein, in the light of the circumstances under which they were made, not
misleading, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, which were not made in
reliance upon and in conformity with written information furnished to the
Company by the Investors expressly for use in the Registration Statement (or any
amendment thereto); (B) any breach or default by the Company of any of the
representations or warranties under this Agreement or any other document
contemplated hereby, (C) any breach by the Company of any of the covenants or
agreements (other than breaches of covenants to be performed by the Company
after the Closing) of the Company under this Agreement or any other document
contemplated hereby or (D) any litigation or proceedings brought by any
shareholder of the Company (whether such action is brought in such shareholder's
name or derivatively on behalf of the Company) in respect of the transactions
contemplated by this Agreement or the Registration Statement or any other
document contemplated hereby (collectively, the "Indemnifiable Investor
Claims").
<PAGE> 17
(ii) against any and all loss, liability, claim, damage or expense
whatsoever, promptly after submission for payment, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any Indemnifiable Investor Claim; provided that
(subject to Section 6(d) below) any such settlement is effected with the written
consent of the Company (which shall not be unreasonably withheld); and
(iii) against any and all expense whatsoever, promptly after
submission for payment (including, subject to Section 6(c) hereof, the
reasonable fees and disbursements of counsel for the indemnified party),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
Indemnifiable Investor Claim, to the extent that any such expense is not paid
under (i) or (ii) above; provided, however, that this indemnity agreement shall
not apply to any loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished to
the Company by any Investor expressly for use in the Registration Statement (or
any amendment thereto), including the Rule 430A Information, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(b) Each Investor severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage or expense described in the indemnity contained
in subsection (a)(i)(A) of this Section, promptly after submission for payment,
but only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
<PAGE> 18
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
except to the extent the indemnifying party is materially prejudiced thereby,
and the indemnifying party may participate at its own expense in the defense of
any such action. If the indemnifying party so elects within a reasonable time
after receipt of such notice, it may assume the defense of such action, with
counsel chosen by it and approved by the indemnified parties in such action,
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from, conflicting with or in addition to those available to such indemnifying
party. Absent any difference or conflict referred to in the preceding sentence,
if an indemnifying party assumes the defense of such action, the indemnifying
parties shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such action. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel retained for local procedural
and practice matters) separate from their own counsel for any indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification could be sought under this
Section 6 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party, (iii) does not impugn the reputation of any
indemnified party and (iv) does not restrict any indemnified party from engaging
in any activity.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for
any settlement of the nature contemplated by Section 6(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
<PAGE> 19
(e) Expenses incurred by an indemnified party in defense or settlement of
any claim that shall be subject to a right of indemnification hereunder shall be
advanced by the Company promptly upon submission for payment, provided that the
Company shall have received an undertaking by or on behalf of such indemnified
party to repay such amount to the extent that it shall be determined ultimately
that the indemnified party is not entitled to be indemnified hereunder.
SECTION 7.
Representations, Warranties and Agreements to Survive Delivery.
---------------------------------------------------------------
All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto and identified as such, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Investor
or controlling person, or by or on behalf of the Company, and shall survive
delivery of the Debentures to the Investors.
SECTION 8.
Termination of Agreement.
-------------------------
(a) This Agreement may be terminated at any time prior to the Closing Date:
(i) by written agreement of the Company and the
Investors;
(ii) by either the Company or any Investor, by giving written notice
of such termination to other parties, if Closing shall not have occurred on or
prior to February 28, 1999 (unless the failure to consummate the Closing by such
date shall be due to the failure of the party seeking to terminate this
Agreement to have fulfilled any of its obligations under this Agreement);
(iii) by any Investor, by giving written notice to the Company, if
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any event has occurred or failed to
occur which would have a Material Adverse Effect, whether or not arising in the
ordinary course of business, or if there has been a breach by the Company of any
representation, warranty, covenant or agreement that would give rise to the
failure of the conditions to the obligations of the Investors set forth in
Section 5(b), which breach cannot be cured after the giving of written notice to
the Company of such breach and prior to the Closing Date;
(iv) by either the Company or any Investor in the event that any
governmental authority shall have issued a final, non-appealable order, decree
or ruling or taken any other final, non-appealable action restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable;
7
<PAGE> 20
(v) by the Company, if the Company's Board of Directors determines in
good faith that such action is in the best interests of the Company and its
stockholders.
(b) If this Agreement is terminated pursuant to this Section 8 such
termination shall be without liability of any party to any other party except as
provided in Section 4(j) and Section 8(c) hereof, except that nothing herein
will relieve any party from liability for breach of this Agreement prior to such
termination.
(c) If this Agreement is terminated:
(i) by either party prior to the effective date of the Registration
Statement, then, provided that the Investors shall not be in breach of their
obligations as set forth herein, the Investors shall be entitled to
reimbursement of their expenses as set forth in Section 4(j);
(ii) by the Company on or after the effective date of the Registration
Statement pursuant to Section 8(a)(v), other than as a result of an alternative
debt or equity financing proposal, then the Company shall promptly pay to the
Investors an amount equal to one-half of the Standby Commitment Fee in addition
to reimbursement of Investors' expenses as set forth in Section 4(j).
(iii) by the Company on or after the effective date of the
Registration Statement pursuant to Section 8(a)(v) as a result of an alternative
debt or equity financing proposal, then the Company shall promptly pay to the
Investors an amount equal to the Standby Commitment Fee in addition to
reimbursement of Investors' expenses as set forth in Section 4(j).
If this Agreement has been terminated and the Company, within six
months of the date of such termination, enters into an agreement or letter of
intent providing for, or consummates, any debt or equity financing not
contemplated herein, then the Company shall promptly pay to the Investors a fee
equal to the Standby Commitment Fee less any amount paid pursuant to subclause
(ii) or (iii) of the preceding sentence; provided, however, that no such amount
shall be payable in the event this Agreement is terminated by the Investors as a
result of Section 8(a)(iii).
<PAGE> 21
SECTION 9.
Notices.
--------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered personally to the
recipient, one day after being sent to the recipient by reputable overnight
express courier service (charges prepaid), five days after being mailed to the
recipient (postage prepaid) or upon confirmation if transmitted by any standard
form of telecommunication. Notices shall be directed as follows:
To Relational Investors, LLC:
Relational Investors, LLC
4330 La Jolla Village Drive,
Suite 220
San Diego, California 92122
Telephone: (619) 597-9400
Telecopy: (619) 597-8200
Attn: John Sullivan
with a copy to:
Sullivan & Cromwell
1888 Century Park East
21st Floor
Los Angeles, California 90067-1725
Telephone: (310) 712-6600
Telecopy: (310) 712-8800
Attn: Alison Ressler
To the Company:
Apria Healthcare Group Inc.
3560 Highland Avenue
Costa Mesa, California 92626
Telephone: (714) 427-2000
Telecopy: (714) 427-4332
Attn: Robert S. Holcombe, Esq.
with a copy to:
Gibson Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Telephone: (213) 229-7000
Telecopy: (213) 229-7520
Attn: Andrew E. Bogen, Esq.
<PAGE> 22
SECTION 10.
Parties.
--------
This Agreement shall each inure to the benefit of and be binding upon
the Investors and the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Investors and the Company and their
respective successors and the controlling persons and officers and directors and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Investors and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Debentures from any Investor shall
be deemed to be a successor by reason merely of such purchase.
SECTION 11.
Governing Law.
--------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of California applicable to agreements made and to be
performed in said state.
SECTION 12.
Miscellaneous.
--------------
(a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company and each of the Investors, or in the case of a waiver,
by the party against whom the waiver is to be effective. No failure or delay by
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
(b) No party to this Agreement may assign any of its rights or obligations
under this Agreement without the prior written consent of the other parties
hereto except that the Investors may without such consent assign their rights
hereunder to one or more of their respective affiliates.
(c) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same agreement.
(d) The heading references herein are for convenience purposes only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
APRIA HEALTHCARE GROUP INC.
By: /s/ Philip L. Carter
-------------------------------
Title: Chief Executive Officer
RELATIONAL INVESTORS, LLC
By: /s/ Ralph V. Whitworth
-------------------------------
Authorized Signatory
<PAGE> 24
Annex A
RELATIONAL ENTITIES
Debentures to
Entity be Purchased
------ ------------
Relational Investors, L.P. $50,000,000, less the
amounts allocated by
Relational to the
entities listed below*
Relational Fund Partners, L.P. *
Relational Coast Partners, L.P. *
Relational Partners, L.P. *
David H. Batchelder Trust *
*Less amounts allocated to another Investor.
<PAGE> 25
Annex B
SUMMARY TERM SHEET
Issuer: Apria Healthcare Group, Inc., a
Delaware corporation.
Issue: Approximately $50 million
principal amount of 10% Convertible
Subordinated Debentures due 2004, the ("Debentures").
Par Value/Price: $1,000 per Note.
Use of Proceeds: Repayment of bank debt.
Offering: Via registered tradable rights
offering.
Ranking: The Debentures are general, unsecured
obligations of the Company,
subordinate in right of payment to
all existing and future Senior
indebtedness of the Company and pari
passu with existing Senior
Subordinated Notes.
Interest: 10% per annum, payable semi-annually;
cumulative and, if not paid on any
interest payment date, additional
interest will accumulate on such
unpaid amount. Interest payable
prior to the anniversary of the date
of issuance of the Debentures in the
year 2002 may, at the election of the
Company, be accrued and paid in cash
on such anniversary. Interest shall
be payable on any such accrued
interest at a rate of 10% per annum.
Redemption Rights:
At option of
the Issuer: The Debentures are redeemable,
in whole or in part, at the Company's
option, at any time on or after the
third anniversary of issuance, upon
not less than 30 nor more than 60
days' notice, at the redemption
prices (expressed as percentages of
the principal amount) of 104%, 102%
and 100% in years 2002, 2003 and
2004, respectively, plus, in each
case, accrued and unpaid interest
including interest on such accrued
and unpaid interest, to the date of
redemption.
<PAGE> 26
At option of
the Holder: Upon the occurrence of a
Change of Control the Company will be
required to offer to purchase the
Debentures at a purchase price equal
to 101% of the aggregate principal
amount thereof, plus accrued and
unpaid interest to the date of
purchase.
Mandatory: On the fifth anniversary of the
initial date of Issuance the Issuer
will redeem all of the Debentures
then outstanding at a redemption
price equal to par value plus accrued
and unpaid interest to the date of
redemption.
Conversion Rights: The Debentures are convertible at the
option of the holder at any time
after June 1, 1999 and prior to the
close of business on the maturity
date, unless previously redeemed or
repurchased, into shares of common
stock at the conversion price equal
to 10% above the average trading
price of the Common Stock of the
Company for the ten trading days
ending three days prior to the
effective date of the Registration
Statement (the "Conversion Price");
provided, however, if such average
trading price (a) is equal to or less
than $3.6363, the Conversion Price
shall be deemed to equal $4.00 and
(b) is equal to or greater than
$4.5454, the Conversion Price shall
be deemed to equal $5.00.
<PAGE> 27
Annex C
[Credit Agreement Amendment Term Sheet]
[To be supplied by Apria]
<PAGE> 28
Annex D
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and to enter into and perform its obligations under this Agreement and
the Stockholders' Agreement.
3. To the best of such counsel's knowledge and information, the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which a failure to so qualify would have a
material adverse effect on the business of the Company and its subsidiaries
considered as one enterprise.
4. The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus in the column "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to this
Agreement or pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus or pursuant to the exercise of convertible
securities, options or warrants referred to in the Prospectus) and the shares of
issued and outstanding Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable. The shares of Common Stock issuable upon
conversion of the Debentures have been duly authorized and validly reserved by
the Company for issuance upon such conversion in the manner provided in the
Indenture, will be validly issued, fully paid and nonassessable.
5. Each Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the [State of Delaware], has
corporate power and authority under such laws to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and, to the best of such counsel's knowledge and information, is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which a failure to so qualify would have a material
adverse effect on the business of the Company and its subsidiaries considered as
one enterprise; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, to the best
of such counsel's knowledge and information, is owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
<PAGE> 29
6. The issuance of the Debentures and the Common Stock issuable upon
conversion of the Debentures is not subject to preemptive or other similar
rights arising by operation of law, under the charter or by-laws of the Company
or, to the best of such counsel's knowledge and information, otherwise.
7. The Debentures to be issued and sold by the Company pursuant to this
Agreement and the Rights have been duly authorized by requisite corporate action
on the part of the Company, and when executed and authenticated and paid for by
the Investors, will be valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable against the Company in accordance
with their terms, except to the extent that enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally, and by general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity); and the Debentures, the Rights and Indenture
conform as to legal matters in all material respects to the descriptions thereof
in the Prospectus.
8. The Indenture has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement, enforceable against the Company in
accordance with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and by
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity); the Indenture has been duly qualified
under the 1939 Act.
9. The Standby Purchase Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
10. The Stockholders' Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
<PAGE> 30
11. The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and, to the best of such counsel's
knowledge and information, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission.
12. At the time the Registration Statement became effective and at the
Closing Date, the Registration Statement (other than the financial statements
and supporting schedules included herein, as to which no opinion need be
rendered) complied as to form in all material respects with the requirements of
the 1933 Act, the 1933 Act Regulations, the 1939 Act and the 1939 Act
Regulations.
13. The Debentures, the Common Stock issuable upon the conversion of the
Debentures and the Indenture conform in all material respects as to legal
matters to the description thereof contained in the Prospectus, and the form of
certificate used to evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements.
14. There are no legal or governmental proceedings pending or, to the best
of their knowledge and information after due inquiry, threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein, and all pending legal or governmental proceedings to which
the Company or any subsidiary is a party or to which any of their property is
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are, considered in the
aggregate, not material.
15. To the best of such counsel's knowledge and information after due
inquiry, (a) there are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by reference as
exhibits thereto, the descriptions thereof or references thereto are correct and
(b) no default exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, notes, lease or other instrument so
described, referred to, filed or incorporated by reference.
16. The execution, delivery and performance of this Agreement, the
Stockholders' Agreement and the Indenture and the consummation of the
transactions contemplated herein and therein and compliance by the Company with
its obligations hereunder and thereunder will not conflict with or constitute a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject, nor
will such action result in any violation of the provisions of the charter or
by-laws of the Company, or any applicable law, administrative regulations or
administrative or court decree.
17. Each document filed pursuant to the 1934 Act (other than the financial
statements and supporting schedules included therein, as to which no opinion
need be rendered) and incorporated or deemed to be incorporated by reference in
the Prospectus complied when so filed as to form in all material respects with
the 1934 Act and the 1934 Act Regulations.
In rendering such opinion, such counsel may rely, as to matters of
fact (but not as to legal conclusions), to the extent he deems proper, on
certificates of responsible officers of the Company and public officials.
Very truly yours,
<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
dated as of November 3, 1998
between
APRIA HEALTHCARE GROUP INC.
and
RELATIONAL INVESTORS, LLC,
ON BEHALF OF THE ENTITIES NAMED HEREIN
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November 3, 1998, between
Apria Healthcare Group Inc., a Delaware corporation (the "Company") and
Relational Investors, LLC, a Delaware limited liability company (together with
its affiliates, "Relational"), on behalf of each of the entities set forth on
Annex A to the Standby Purchase Agreement (as defined below) (collectively with
Relational, the "Investors") .
W I T N E S S E T H :
WHEREAS, the Company proposes to distribute to its stockholders rights
("Rights") to purchase approximately $50,000,000 aggregate principal amount of
its 10% Convertible Subordinated Debentures due 2004, with the exact aggregate
principal amount being equal to the number of shares of common stock outstanding
on the record date for distribution of the Rights (the "Debentures"). The
offering of the Debentures pursuant to the Rights is referred to herein as the
"Rights Offering";
WHEREAS, the parties hereto entered into a Standby Purchase Agreement
dated as of November 3, 1998 (the "Standby Purchase Agreement"), pursuant to
which the Investors agreed to subscribe to purchase all Debentures not purchased
by other holders of Rights;
WHEREAS, the Company hereby agrees to grant the Investors the
registration rights contained herein in consideration of their agreement to
purchase all Debentures not purchased by other holders of Rights; and
WHEREAS, the parties hereto deem it in their best interests and in the
best interests of the Company to provide for certain matters with respect to the
governance of the Company and desire to enter into this Agreement in order to
effectuate that purpose.
<PAGE> 3
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree as follows:
ARTICLE I. Certain Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
"affiliate" shall mean with respect to any Person, (a) any Person
which directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such Person, (b) any Person
who is a director or executive officer, (i) of such Person, (ii) of any
subsidiary of such Person, or (iii) of any Person described in the foregoing
clause (a), or (c) any spouse, parent, sibling, mother-in-law, father-in-law,
brother-in-law, sister-in-law, aunt, uncle, first cousin or direct descendant of
any Person described in the foregoing clause (b). For purposes of this
definition, "control" of a Person shall mean the power, direct or indirect, (i)
to vote or direct the voting of 50% or more of the outstanding shares of voting
Capital Stock of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agreement" shall mean this Agreement as in effect on the date hereof
and as hereafter from time to time amended, modified or supplemented in
accordance with the terms hereof.
"Closing Date" shall have the meaning specified in
the Standby Purchase Agreement.
"Common Stock" shall mean the Common Stock, par value $0.001 per
share, of the Company.
"Company" shall have the meaning assigned to such
term in the preamble.
"Company Securities" shall have the meaning assigned to such term in
Section 2.1(g).
"Credit Agreement" shall mean that Credit Agreement dated as of August
9, 1996, between the Company and certain of its subsidiaries, Bank of America,
National Trust and Savings Association, Nationsbank of Texas, N.A. and other
financial institutions from time to time party, as amended.
"Exchange Act" shall mean, as of any date, the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.
"Holder Request" shall have the meaning assigned to such term in
Section 2.1(a).
<PAGE> 4
"initial shares" shall have the meaning assigned to such term in
Section 2.3(e).
"NASD" means the National Association of Securities Dealers, Inc., or
any successor regulatory body exercising similar functions.
"Person" shall mean an individual or a corporation, limited liability
company, association, partnership, joint venture, organization, business,
individual, trust, or any other entity or organization, including a government
or any subdivision or agency thereof.
"Public Offering" shall mean the sale of shares of Common Stock to the
public subsequent to the date hereof pursuant to a registration statement under
the Securities Act which has been declared effective by the SEC (other than a
registration statement on Form S-8 or any other successor form).
"Registrable Securities" shall mean the following:
(a) all shares of Common Stock (i) outstanding on the date hereof or
hereafter acquired by any Investor or its affiliates or (ii) issuable under
warrants, options or convertible securities outstanding on the date hereof
or hereafter issued to any Investor or its affiliates, including, without
limitation, the Debentures; and
(b) any shares of Common Stock issued or issuable by the Company in
respect of any shares of Common Stock referred to in the foregoing clause
(a) by way of a pay- in-kind dividend, stock dividend or stock split or in
connection with a combination or subdivision of shares, reclassification,
recapitalization, merger, consolidation or other reorganization of the
Company.
As to any particular Registrable Securities that have been issued,
such securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of under such registration statement, (ii) they shall have been distributed to
the public pursuant to Rule 144 under the Securities Act, (iii) they shall have
been otherwise transferred or disposed of by the Investors, (iv) the Company
shall have received a written opinion of counsel reasonably acceptable to the
Investors or no action advice from the SEC to the effect that such securities
may be sold by the Investors without the requirement of registration or
qualification under the Securities Act or (v) they shall have ceased to be
outstanding.
<PAGE> 5
"Registration Expenses" shall mean any and all out-of-pocket expenses
incident to the Company's performance of or compliance with Article III hereof,
including, without limitation, all SEC, stock exchange or NASD registration and
filing fees, all fees and expenses of complying with all applicable federal and
state securities laws and blue sky laws (including the reasonable fees and
disbursements of underwriters' counsel in connection with blue sky
qualifications and NASD filings), all fees and expenses of the transfer agent
and registrar for the Registrable Securities, all printing expenses, the fees
and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or "cold comfort"
letters required by or incident to such performance and compliance, and the
reasonable fees and disbursements of one firm of counsel retained by each
Investor participating in the registration, but excluding underwriting discounts
and commissions and applicable transfer and documentary stamp taxes, if any,
which shall be borne by the seller of the securities in all cases.
"SEC" shall mean the Securities and Exchange
Commission.
"Securities Act" shall mean, as of any date, the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
ARTICLE II. Registration Rights.
Section II.1. Demand Registrations.
(a) At any time after the first anniversary of the Closing Date, and
until the later of (i) the fifth anniversary of the Closing Date and (ii) such
time as the Investors own less than 10.0% of the outstanding Common Stock of the
Company (assuming, for such purpose, the conversion of all outstanding
Debentures), one or more Investors (the "Requesting Investors") may request in
writing that the Company effect the registration under the Securities Act of all
or part of their Registrable Securities, specifying in the request the number
and types of Registrable Securities to be registered by each such holder and the
intended method of disposition thereof (such notice is hereinafter referred to
as a "Holder Request"). Upon receipt of such Holder Request, the Company will
promptly give written notice of such requested registration to all other holders
of Registrable Securities, which other holders shall have the right, subject to
the provisions of Section 2.1(h) hereof, to include the Registrable Securities
held by them in such registration and thereupon the Company will, as
expeditiously as possible, use its best efforts to effect the registration under
the Securities Act of:
(i) the Registrable Securities which the Company
has been so requested to register by the Requesting
Investors; and
<PAGE> 6
(ii) all other Registrable Securities which the Company has been
requested to register by any other holder thereof (the "Other Holders" and,
together with the Requesting Investors, the "Selling Holders") by written
request given to the Company within 30 calendar days after the giving of
such written notice by the Company.
all to the extent necessary to permit the disposition of the Registrable
Securities so to be registered pursuant to an Underwritten Offering or by such
other method of disposition as the Requesting Investors may specify in the
Holder Request; provided, however, that the Company shall not be obligated to
file a registration statement pursuant to any Holder Request under this Section
2.1(a);
(A) Unless the Company shall have received requests for such
registration with respect to Registrable Securities (i) constituting
at least 20% of the Registrable Securities (assuming, for the purpose
of calculating such percentage, the conversion of all outstanding
Debentures) and (ii) having a market value of at least $5.0 million;
or
(B) Within a period of 6 months after the effective date of any
other registration statement relating to any registration request
under this Section 2.1(a); or
(C) Within three (3) months of the effective date of any
registration statement for equity securities of the Company (other
than on Form S-8 or Form S-4 or any successor form).
(b) Notwithstanding the foregoing provisions of Section 2.1(a), and
except as provided in Section 2.1(h), the Company shall not be obligated to file
more than an aggregate of two (2) registration statements pursuant to this
Section 2.1.
(c) If the Company proposes to effect a registration requested
pursuant to this Section 2.1 by the filing of a registration statement on Form
S-3 (or any successor short-form registration statement), the Company will
comply with any request by the managing underwriter to effect such registration
on another permitted form if such managing underwriter advises the Company that,
in its opinion, the use of another form of registration statement is of material
importance to the success of such proposed offering, provided that the
incremental additional cost of using such other form is borne by the Requesting
Holder.
<PAGE> 7
(d) A registration requested pursuant to this Section 2.1 shall not be
deemed to have been effected (i) unless a registration statement with respect
thereto has become effective and remained effective in compliance with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement until such time as
all of such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement (unless the failure to so dispose of such
Registrable Securities shall be caused solely by reason of a failure on the part
of the Selling Holders); provided that such period need not exceed 60 days; (ii)
if after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the SEC or other
governmental agency or court for any reason not attributable solely to the
Selling Holders or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than solely by reason of a
failure on the part of the Selling Holders.
(e) The Company will pay all Registration Expenses in connection with
each of the registrations of Registrable Securities effected by it pursuant to
this Section 2.1.
(f) Subject to any existing commitments of the Company, the Requesting
Investors shall have the right to select the investment bank (or investment
banks) that shall manage the offering (collectively, the "managing underwriter")
involving a registration under this Section 2.1; provided that such managing
underwriter is reasonably acceptable to the Company.
(g) Whenever a requested registration pursuant to this Section 2.1
involves a firm commitment underwriting (an "Underwritten Offering"), the only
shares that may be included in such Underwritten Offering are (i) Registrable
Securities, and (ii) securities of the Company which are not Registrable
Securities, but which are includable by the holders thereof upon exercise
"demand" or "piggyback" registration rights similar to those applicable to
Registrable Securities pursuant to Sections 2.1 or 2.2 or securities offered for
sale by the Company ("Company Securities").
(h) If a registration pursuant to this Section 2.1 involves an
Underwritten Offering and the managing underwriter shall advise the Company
that, in its judgment, the number of shares proposed to be included in such
Underwritten Offering exceeds the number which can be sold in such offering so
as to be reasonably likely to have an adverse effect on the price, timing or
distribution of the securities offered in such offering, then the Company will
promptly so advise each holder of Registrable Securities and Company Securities
that has requested registration, and the Company Securities, if any, shall first
be excluded from such Underwritten Offering to the extent necessary to meet such
limitation; and if further exclusions are necessary to meet such limitation,
Registrable Securities requested to be registered pursuant to Section 2.1(a)(i)
or Section 2.1(a)(ii) shall be excluded pro rata, based on the respective
numbers of shares of Common Stock as to which registration shall have been
requested by such Persons. If the number of Registrable Securities requested to
be registered pursuant to Section 2.1(a)(i), but that are excluded from
registration pursuant to this Section 2.1(h), is equal or greater to 25% of the
total number of Registrable Securities requested to be so registered, then such
registration by the Company shall not count as a registration for the purposes
of Section 2.1(b) only.
<PAGE> 8
(i) It is hereby further agreed that with respect to any registration
requested pursuant to this Section 2.1 the Company may defer the filing or
effectiveness of any registration statement related thereto (or cause sales to
cease under any previously filed registration statement) for a reasonable period
of time not to exceed 120 days after such request if (A) the Company is, at such
time, working on an underwritten public offering of Common Stock and is advised
by its managing underwriter(s) that such offering would in its or their opinion
be adversely affected by such filing or (B) the Company determines, in its good
faith and reasonable judgment, that any such filing or the offering of any
Registrable Securities would materially impede, delay or interfere with any
material proposed financing, offer or sale of securities, acquisition, corporate
reorganization or other significant transaction involving the Company; provided
that, with respect to clause (B), the Company gives the Requesting Investors
written notice of such determination; and provided further, however, with
respect to both clauses (A) and (B), the Company shall not be entitled to
postpone such filing or effectiveness (or to cause sales under an existing
registration statement to cease) if, within the preceding 12 months, it had
effected two postponements pursuant to this paragraph (i) and, following such
postponements, the Registrable Securities to be sold pursuant to the postponed
registration statements were not sold (for any reason).
Section II.2. Piggyback Registrations.
(a) If the Company at any time proposes to register any of its equity
or debt securities under the Securities Act (other than a registration on Form
S-4 or S-8 or any successor or similar forms thereto), whether or not for sale
for its own account, on a form and in a manner that would permit registration of
Registrable Securities for sale to the public under the Securities Act, it will
give written notice to all the holders of Registrable Securities promptly of its
intention to do so, describing such securities and specifying the form and
manner and the other relevant facts involved in such proposed registration
(including, without limitation, (x) whether or not such registration will be in
connection with an underwritten offering of Registrable Securities and, if so,
the identity of the managing underwriter and whether such offering will be
pursuant to a "best efforts" or "firm commitment" underwriting and (y) the range
of prices (net of any underwriting commissions, discounts and the like) at which
the Registrable Securities are reasonably expected to be sold) if such
disclosure is reasonably acceptable to the managing underwriter. Upon the
written request of any such holder delivered to the Company within 30 calendar
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company will use its best efforts
to effect the registration under the Securities Act of all the Registrable
Securities that the Company has been so requested to register; provided,
however, that:
<PAGE> 9
(i) If, at any time after giving such written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the
Company may, at its election, give written notice of such determination to
each holder of Registrable Securities who made a request as provided herein
and thereupon the Company shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not
from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of the holders of the
Registrable Securities to request that such registration be effected as a
registration under Section 2.1; and
(ii) If such registration involves an Underwritten Offering, all
holders of Registrable Securities requesting some or all of their
Registrable Securities to be included in the Company's registration must
sell that portion of their Registrable Securities to the underwriters on
the same terms and conditions as apply to the Company and the other holders
participating therein; provided that prior to the effective date of the
registration statement filed in connection with such registration,
immediately upon notification to the Company from the managing underwriter
of the price at which such securities are to be sold, if such price is
below the range of prices which the Company indicated to all holders of
Registrable Securities in accordance with Section 2.2(a)(y), the Company
shall so advise such holders participating in the Underwritten Offering
(the "Participating Holders") of such price, and such Participating Holder
shall then have the right to withdraw its request to have its Registrable
Securities included in such registration statement.
No registration effected under this Section 2.2 shall. relieve the Company of
its obligation to effect registration upon request under Section 2.1.
(b) The Company shall not be obligated to effect any registration of
Registrable Securities under this Section 2.2 incidental to the registration of
any of its securities (on Form S-4, Form S-8 or any successor or similar form)
in connection with mergers, acquisitions, exchange offers, dividend reinvestment
plans or stock option or other employee benefit plans.
<PAGE> 10
(c) The Registration Expenses incurred in connection with each
registration of Registrable Securities requested pursuant to this Section 2.2
shall be paid by the Company.
(d) If a registration pursuant to this Section 2.2 involves an
Underwritten Offering and the managing underwriter advises the Company that, in
its opinion, the number of securities proposed to be included in such
registration exceeds the number which can be sold in such offering so as to be
reasonably likely to have an adverse effect on the price, timing or distribution
of the securities offered in such offering, the Company will include in such
registration (A) first, the Company Securities being registered for issuance by
the Company or pursuant to "demand" registration rights and/or any Registrable
Securities being registered pursuant to Section 2.1 (in accordance with the
priorities set forth in Section 2.1, if applicable), and (B) second, the number
of Registrable Securities requested to be included in such registration pursuant
to this Section 2.2 and/or Company Securities requested to be included in such
registration pursuant to "piggyback" registration rights on a pro rata basis,
based upon the respective number of shares of Common Stock as to which
registration shall have been requested by all such persons.
(e) In connection with any Underwritten Offering with respect to which
holders of Registrable Securities shall have requested registration pursuant to
this Section 2.2, the Company shall have the right to select the managing
underwriter with respect to the offering; provided that such managing
underwriter is reasonably acceptable to each Investor if Registrable Securities
of such Investor are being registered in connection therewith.
Section II.3. Registration Procedures.
(a) If and whenever the Company is required to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in Section 2.1 or 2.2, the Company will, as expeditiously as possible:
(i) Prepare and, in any event within 60 calendar days after the
end of the period within which requests for registration may be given to
the Company, file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective, provided that the
Company may discontinue any registration of its securities that is being
effected pursuant to Section 2.2 at any time prior to the effective date of
the registration statement relating thereto.
<PAGE> 11
(ii) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period as may be requested by
any Investor (if Registrable Securities of such Investor are being
registered) not exceeding sixty days and to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement, provided that
before filing a registration statement or prospectus relating to the sale
of Registrable Securities, or any amendments or supplements thereto, the
Company will furnish to counsel and to each holder of Registrable
Securities covered by such registration statement or prospectus, copies of
all documents proposed to be filed, which documents will be subject to the
review of such counsel, and the Company will give reasonable consideration
in good faith to any comments of such counsel.
(iii) Furnish to each holder of Registrable Securities covered by
the registration statement and to each underwriter, if any, of such
Registrable Securities, such number of copies of a prospectus and
preliminary prospectus for delivery in conformity with the requirements of
the Securities Act, and such other documents, as such Person may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities.
(iv) Use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition of the Registrable Securities owned by such seller, in such
jurisdictions, except that the Company shall not for any such purpose be
required (A) to qualify to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this Section 2.3(a)(iv), it
is not then so qualified, or (B) to subject itself to taxation in any such
jurisdiction, or (C) to take any action which would subject it to general
or unlimited service of process in any such jurisdiction where it is not
then so subject.
(v) Use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities.
<PAGE> 12
(vi) Immediately notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 2.3(a)(ii), if the
Company becomes aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and, at the request of any such seller,
deliver a reasonable number of copies of an amended or supplemented
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(vii) Otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to
its security holders, in each case as soon as praticable, but not later
than 45 calendar days after the close of the period covered thereby (90
calendar days in case the period covered corresponds to a fiscal year of
the Company), an earnings statement of the Company which will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 promulgated
thereunder.
(viii) Use its reasonable best efforts in cooperation with the
underwriters to list such Registrable Securities on whatever national
securities exchange such securities are then listed.
(ix) In the event the offering is an Underwritten Offering, use
its reasonable best efforts to obtain a "cold comfort" letter from the
independent public accountants for the Company in customary form and
covering such matters of the type customarily covered by such letters and
as the underwriters and any Investor may reasonably request (if Registrable
Securities of such Investor are being registered), in order to effect an
underwritten public offering of such Registrable Securities.
(x) Execute and deliver all instruments and documents (including
in an Underwritten Offering an underwriting agreement in customary form,
including, without limitation, indemnities to the effect and to the extent
provided in Section 2.4) and take such other actions and obtain such
certificates and opinions as the underwriters and any Investor may
reasonably request (if Registrable Securities of such Investor are being
registered) in order to effect an underwritten public offering of such
Registrable Securities.
<PAGE> 13
(xi) Make available for inspection by the seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
(xii) Obtain for delivery to the underwriter or agent an opinion
or opinions from counsel for the Company in customary form and in form and
scope reasonably satisfactory to such underwriter or agent and their
counsel.
(xiii) Provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date
later that the effective date of such registration.
(b) Each holder of Registrable Securities will, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 2.1(i) or Section 2.3(a)(vi), forthwith discontinue disposition of the
Registrable Securities pursuant to any registration statement and prospectus
covering such Registrable Securities until, as applicable, (i) such holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
Section 2.3(a)(vi) or (ii) sales are permitted to resume under Section 2.1(i).
(c) If a registration pursuant to or described in Section 2.1 or 2.2
involves an Underwritten Offering, each holder of Registrable Securities agrees,
whether or not such holder's Registrable Securities are included in such
registration, not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Registrable Securities, or
of any security convertible into or exchangeable or exercisable for any
Registrable Securities (other than as part of such Underwritten Offering),
without the consent of the managing underwriter, during a period commencing
seven calendar days before and ending 90 calendar days (or such lesser, number
as the managing underwriter shall designate) after the effective date of such
registration.
<PAGE> 14
(d) If a registration pursuant to or described in Section 2.1 or 2.2
involves an Underwritten Offering, any holder of Registrable Securities
requesting to be included in such registration may elect, in writing, prior to
the effective date of the registration statement filed in connection with such
registration, not to register such securities in connection with such
registration, unless such holder has agreed with the Company or the managing
underwriter to limit its rights under this Section 2.3; provided, however, that
if a holder of Registrable Securities that has requested a registration pursuant
to Section 2.1 withdraws its request after a registration statement has been
filed in response to such request, the Investors shall be deemed to have used
one of the two (2) demand registrations provided for under Section 2.1 unless
such holder reimburses the Company for all of its costs in connection with
preparing and filing such registration statement.
(e) It is understood that in any Underwritten Offering in addition to
any shares of stock (the "initial shares") the underwriters have committed to
purchase, the underwriting agreement may grant the underwriters an option to
purchase up to a number of additional shares of stock (the "option shares")
equal to 15% of the initial shares (or such other maximum amount as the NASD may
then permit), solely to cover overallotments. Option shares to be sold shall be
allocated in accordance with the provisions of Sections 2.1(h) and 2.2(d), as
applicable.
Section II.4. Indemnification.
(a) In the event of any registration of any securities of the Company
under the Securities Act pursuant to Section 2.1 or 2.2, the Company will, and
it hereby agrees to, indemnify and hold harmless, to the extent permitted by
law, each seller of any Registrable Securities covered by such registration
statement, each affiliate of such seller and their respective directors,
officers, employees and agents or general and limited partners (and directors,
officers, employees and agents thereof) and, if such seller is a portfolio or
investment fund, its investment advisors or agents, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any underwriter within
the meaning of the Securities Act, as follows:
<PAGE> 15
(i) against any and all loss, liability, claim, damage or expense
whatsoever, promptly after submission for payment, arising out of or
resulting from any untrue statement or alleged untrue statement of a
material fact contained in any registration statement (or any amendment or
supplement thereto), including any information included therein pursuant to
Rule 430A under the Securities Act (the "Rule 430A Information") if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of an untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
or prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in a
registration statement (or any amendment thereto), including the Rule 430A
Information, which were not made in reliance upon and in conformity with
written information furnished to the Company by the Investors expressly for
use in a registration statement (or any amendment thereto);
(ii) against any and all loss, liability, claim, damage or
expense whatsoever, promptly after submission for payment, to the extent of
the aggregate amount paid in settlement of any litigation, or investigation
or proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided that
any such settlement is effected with the written consent of the Company
(which shall not be unreasonably withheld); and
(iii) against any and all expense whatsoever, promptly after
submission for payment (including, subject to Section 2.4(c) hereof, the
reasonable fees and disbursements of counsel for the indemnified parties),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or of any such alleged untrue statement
or omission, to the extent that any such expense is not paid under (i) or
(ii) above; provided, however, that this indemnity agreement shall not
apply to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written
information furnished to the Company by any indemnified party expressly for
use in the registration statement (or any amendment thereto), including the
Rule 430A Information, or any preliminary prospectus or prospectus (or any
amendment or supplement thereto).
<PAGE> 16
(b) Each indemnified party severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
registration statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage or expense described in the indemnity
contained in subsection (a)(i) of this Section, promptly after submission for
payment, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the registration statement (or any
amendment thereto), including the Rule 430A Information, or any preliminary
prospectus or prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the Company by such
indemnified party expressly for use in the registration statement (or any
amendment thereto) or such preliminary prospectus or prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
except to the extent the indemnifying party is materially prejudiced thereby. An
indemnifying party may participate at its own expense in the defense of any such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action, with counsel chosen by it
and approved by the indemnified parties in such action, unless such indemnified
parties reasonably object to such assumption on the ground that there may be
legal defenses available to them which are different from, conflicting with or
in addition to those available to such indemnifying party. Absent any such
difference or conflict, if an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel retained for
local procedural and practice matters) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification could be sought under
this Section 2.4 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim, (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party, (iii) does not impugn the reputation of any
indemnified party and (iv) does not restrict any indemnified party from engaging
in any activity.
<PAGE> 17
(d) The Company and each seller of Registrable Securities shall
provide for the foregoing indemnity (with appropriate modifications) in any
underwriting agreement with respect to any registration or other qualification
of securities under any federal or state law or regulation of any governmental
authority.
Section II.5. Contributions. In order to provide for just and
equitable contribution in circumstances under which the indemnity contemplated
by Section 2.4 is for any reason not available or insufficient for any reason to
hold harmless an indemnified party in respect of any losses, claims, damages or
liabilities referred to therein, the parties required to indemnify by the terms
thereof shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
the Company, any seller of Registrable Securities and one or more of the
underwriters, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act. In determining the amounts which the
respective parties shall contribute, there shall be considered the relative
benefits received by each party from the offering of the Registrable Securities
by taking into account the portion of the proceeds of the offering realized by
each, and the relative fault of each party by taking into account the parties'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission and any other equitable considerations appropriate under
the circumstances. The Company and each Person selling securities agree with
each other that no seller of Registrable Securities shall be required to
contribute any amount in excess of the amount such seller would have been
required to pay to an indemnified party if the indemnity under Section 2.4 were
available. The Company and each such seller agree with each other and the
underwriters of the Registrable Securities, if requested by such underwriters,
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the underwriters were
treated as one entity for such purpose) or for the underwriters' portion of such
contribution to exceed the percentage that the underwriting discount bears to
the public offering price of the Registrable Securities. For purposes of this
Section 2.5, each Person, if any, who controls an underwriter within the meaning
of Section 15 of the Securities Act shall have the same rights to contribution
as such underwriter, and each director and each officer of the Company who
signed the registration statement, and each Person, if any, who controls the
Company or a seller of Registrable Securities within the meaning of Section 15
of the Securities Act shall have the same rights to contribution as the Company
or a seller of Registrable Securities, as the case may be.
<PAGE> 18
Section II.6. Rule 144. If the Company shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company covenants that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the SEC thereunder (or, if the Company is not required to file such reports, it
will, upon the request of any holder of Registrable Securities, make publicly
available other information), and it will take such further action as any holder
of Registrable Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell shares of Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of any holder of Registrable Securities,
the Company will deliver to such holder a written statement as to whether it has
complied with such requirements,
ARTICLE III. Termination.
Section III.1. Termination. Except as specifically provided elsewhere
in this Agreement, this Agreement shall terminate with respect to any Investor
when such Investor no longer owns any Registrable Securities.
ARTICLE IV. Miscellaneous.
Section IV.1. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
personally to the recipient, one day after being sent to the recipient by
reputable overnight express courier service (charges prepaid), five days after
being mailed to the recipient (postage prepaid) or upon confirmation if
transmitted by any standard form of telecommunication. Notices shall be directed
as follows:
<PAGE> 19
To Relational Investors, LLC:
Relational Investors, LLC
4330 La Jolla Village Drive,
Suite 220
San Diego, California 92122
Telephone: (619) 597-9400
Telecopy: (619) 597-8200
Attn: John Sullivan
with a copy to:
Sullivan & Cromwell
1888 Century Park East
21st Floor
Los Angeles, California 90067-1725
Telephone: (310) 712-6600
Telecopy: (310) 712-8800
Attn: Alison Ressler
To the Company:
Apria Healthcare Group Inc.
3560 Highland Avenue
Costa Mesa, California 92626
Telephone: (714) 427-2000
Telecopy: (714) 427-4332
Attn: Robert Holcombe
with a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071
Telephone: (213) 229-7000
Telecopy: (213) 229-7520
Attn: Andrew E. Bogen, Esq.
Section IV.2. Parties. This Agreement shall each inure to the benefit
of and be binding upon the Investors and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Investors and the Company and their respective successors and the controlling
persons and officers and directors and their heirs and legal representatives,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the Investors and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Debentures from any Investor shall be deemed to be a successor by
reason merely of such purchase.
<PAGE> 20
Section IV.3. Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of
the State of California applicable to agreements made and to
be performed in said state.
Section IV.4. Miscellaneous.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company and each of the Investors, or in the case of a waiver,
by the party against whom the waiver is to be effective. No failure or delay by
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
(b) No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
parties hereto except that the Investors may without such consent assign their
rights hereunder to one or more of their respective affiliates.
(c) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same agreement.
(d) The heading references herein are for convenience purposes only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
APRIA HEALTHCARE GROUP INC.
By: /s/ Philip L. Carter
--------------------------------
Title: Chief Executive Officer
RELATIONAL INVESTORS, LLC
By: /s/ Ralph V. Whitworth
-------------------------------
Authorized Signatory
